OPERATIONAL EFFICIENCY is key to higher profits, yet IT channel companies are contending with new complexities from business transformation that make achieving efficiency challenging, according to recent research from CompTIA Inc.
Channel firms surveyed by the Downers Grove, Ill.-based industry association cite customer demand, cloud computing, and emerging technology as top drivers for transforming their business from a hardware-centric reseller model to a services and recurring revenue model. In addition, a quarter of respondents polled point to decreasing margins as a factor in their thinking.
Yet transformation has made operating an IT channel business more complex than it was two years ago, according to 45 percent of respondents. The top reason, say 53 percent of channel pros, is the increasing streams of data they must manage and analyze. Other key factors that have made business operations more complex include expansion into new business lines/models (49 percent), more challenging and complicated customer engagement and the introduction of emerging technology to IT channel companies’ portfolios (both at 48 percent), and more vendors and suppliers in the mix (38 percent).
While respondents say operational efficiency is the No. 1 necessity to reaching overall business goals, only 2 in 10 assess their current operations as very efficient, and 39 percent deem themselves mostly efficient. Another 39 percent put themselves in the middle of the pack, and just 5 percent say they are very inefficient.
Survey respondents do know, however, that following best practices is key to efficiency, with 94 percent saying that creating repeatable processes, for example, is important. Similarly, 9 in 10 respondents say that calculating ROI and time to profitability before launching new initiatives is important or very important.
Indeed, CompTIA’s study makes clear that channel pros appreciate the importance of implementing best practices. While participants cite pricing pressure from customers and competitors as their top margin eater, they say inefficiencies in service delivery, sales processes, and financial performance tracking are squeezing profits as well.
Surveyed companies, fortunately, are not just wringing their hands about this. Efforts to improve efficiency are underway, such as implementing internally developed management methods, KPI tracking, project management frameworks like ITIL, and scorecard metrics.